Chancellor’s speech confirms two new Investment Zones for Wales

The UK Government has announced in Wednesday’s Autumn Statement that the Cardiff Capital Region (CCR) is to host one of the UK’s refocused Investment Zones in a joint funding package with the Welsh Government. The joint package is worth £160M over a period of between five to ten years and will be delivered by the South East Wales Corporate Joint Committee from 2024 onwards.

The Chancellor, Jeremy Hunt also unveiled a second Investment Zone spanning Wrexham and Flintshire.  The Chancellor said this underlined the UK Government’s commitment to boost investment, manage debt, and enhance work opportunities in Wales.

Hunt also acknowledged the input from MPs in Wrexham and Clwyd South, praising Wrexham and Flintshire as excellent areas, which he plans to visit soon. The Wrexham and Flintshire Investment Zone will be implemented by the North Wales Corporate Joint Committee, while the Cardiff and Newport zone will be managed by the South East Wales Corporate.

The UK government plan to work closely with the Welsh Government to ensure the successful rollout of these zones.

Additionally, the Chancellor declared the establishment of three more Investment Zones in England, located in the West Midlands, East Midlands, and Greater Manchester. These zones collectively aim to attract £3 billion in private investment and facilitate the creation of 65,000 jobs.

Previously, the government had announced plans for 12 such zones in the Spring Budget, with West Yorkshire being the latest confirmed location. This follows the establishment of zones in South Yorkshire and the Liverpool City Region.

To further incentivize these zones, including Freeports, financial benefits have been extended from five to ten years. Hunt also unveiled a £150 million Investment Opportunity Fund as part of this initiative.

Rhian Owen, Cardiff-based partner and head of commercial audit in Wales for Grant Thornton UK LLP, said:

“It’s very pleasing to see Wrexham and Flintshire singled-out as one of the new Investment Zones.  Aerospace and automotive sectors have long been a powerful dynamic in North Wales and can serve as a catalyst for further growth across a wider range of industries.  New ways of working since the pandemic have also encouraged entrepreneurs to think more imaginatively about whether they can start and scale a business in the area, which plays to the strength of a part of the world close to big cities and transport networks, but also areas of outstanding natural beauty.

“Of the other headline measures, making permanent the full expensing of capital expenditure will support larger business.

“As a nation, we really can’t do enough to address the skills gaps in a wide range of industries, so the £50 million to support apprenticeships in engineering and other key sectors is going in the right direction.

“Many UK regions have focused on developing the science and innovation economy and making available an additional £500 million to fund innovation centres to make the UK an ‘AI powerhouse’ sounds progressive.

“Decarbonising how we live and work is the challenge of our times and whilst there are some encouraging measures around clean energy to access the grid, doubtless there is scope to do a great deal more.”

Cllr Huw Thomas, Leader of Cardiff Council said of the announcement: “This is very welcome news for the Region and for Cardiff. Our universities host world-class research capabilities, we have a booming tech sector, and significant partnership arrangements are already in place. This means we are prepared, ready and able to make the best use of this opportunity. Cardiff is the economic driving force behind Wales, and Cardiff’s role in these new investment zones will ensure the Region, and Cardiff, benefit from this joint governmental package for years to come.”

Cllr Jane Mudd, Leader of Newport City Council commented on the role played by the pivotal compound semiconductor cluster in the Newport area: “CCR set up the world’s first compound semiconductor cluster in Newport and this first-mover status has meant that the Region is front-of-mind for both the Welsh and UK Governments for innovation and investment. I am delighted that the Investment Zone is coming to the Southeast Wales area and we look forward to the future prosperity this will produce.”

Concluding, Cllr Anthony Hunt, Leader of Torfaen County Borough Council and Chair of CCR’s Regional Cabinet said: “This is great news for the Region and for the Welsh economy in general. To have two of these new Investment Zones situated in Wales demonstrates how deep and broad our capabilities are. We can take this announcement as a vote of confidence in the ambition and talent across the ten Local Authorities that make up the Cardiff Capital Region. We look forward to working with the UK and Welsh Governments on this.”

The Chancellor’s announcement was also welcomed by the CEO of enfinium, an energy from waste company with a site in Flintshire (Parc Adfer).

Mike Maudsley, CEO of enfinium, said: “Today’s investment zone announcement is welcome news for businesses in Flintshire like enfinium that are looking to unlock new investment in pioneering decarbonisation technologies such as carbon capture and storage, heat networks and electrolytic hydrogen from waste.”

enfinium diverts 2.3 million tonnes of unrecyclable waste from climate-damaging landfill, putting it to good use by turning it into home grown energy, enough to power 500,000 UK homes. enfinium’s ambition is to transform its facilities into local ‘decarbonisation hubs’ powered by the millions of tonnes of unrecyclable waste the UK will produce for decades to come.

Using existing energy from waste infrastructure, enfinium could contribute to heat networks, produce electrolytic hydrogen, or use carbon capture technology to provide durable, high quality carbon removals which will be critical for the UK to achieve net zero by 2050.

Director and Co-Founder, Richard Selby, Pro Steel Engineering based in Pontypool welcomed the Chancellors news that there would be more funding for apprenticeships and called for the need for this funding to be spent in Wales.  He said:

“I was delighted to hear that £50m has been allocated over the next two years to increase the number of apprenticeships in areas including engineering and we need to ensure this benefit is felt here in Wales given the skills shortage we continue to suffer from. The 9.8% minimum wage increase will be invaluable to all during this cost of living crisis, and this has tried to have been balanced to business owners with the introduction of the full expensing business tax break made permanent which will be welcomed by many. SMEs however will be wondering how to overcome this cost rise in their forthcoming budgets for 2024.”

However, the Chancellor failed to take steps to reduce the fuel duty burden, which disappointed many Welsh Hauliers.  Managing Director, James Howells, from The Monex Group based in Newport, said:

“I was disappointed not to hear anything about fuel duty within today’s Budget headlines given that we have a fleet of over 150 vehicles on the roads. While the increase to the minimum wage to £11.44 per hour, which comes into force in April, will be a huge blow to many British businesses, the full expensing business tax break being made permanent will definitely be a positive to those larger companies with money in the bank to spend on assets. The announcement for employees regarding the 2% decrease in national insurance payments will however be very much welcomed by our 270 strong team.”